My Family Office
A brief Introduction
When I started in this business it was a commission based model. And commissions were high. They could be. This is because there were not very many of us to choose from. There was no such thing as online brokerages (the internet was still in it’s infancy), cell phones were only in cars and there very few of them at that, and information was king. By that I mean, whoever, or whichever broker, could get the latest information to the investor the quickest generally got the sale and commission.
Here is how it worked. As the broker, we had a list of clients that we would call and tell them something along the lines of Intel has a new chip that will be faster, blah blah blah. Then buy the stock in their account for them thus generating a commission. At then end of the day, we would add up all our trades (we wrote them down on cards) and called the client back to tell them that they got the shares and at what price. A confirmation was then mailed to them and they would receive it maybe a week later. This was the model that had been in place for decades.
As the investor, they relied on us to bring them ideas as they did not have the means to access the information. The larger the investor, the better off they were. Imagine if you had a list of clients to call that day with the news on a stock that you felt would drive it up. Who do you think got the first call? It wasn’t the guy on the list with the smallest account! The first call went to the best client and then on down the list until the client with the smallest amount of assets. What happened to the stock during that time? It most likely went up after every buy order by the broker was processed. This resulted in the client with the most money with the broker getting the BEST PRICES as well. The more you had, the better off you were treated. Make sense?
One of the best methods used to tackle this issue was fee-based accounts. Fee based accounts simply charged an annual amount in form of a % of the assets under management. This then allowed the broker to place what we call block trades. In other words, instead of the broker buying shares of Intel for every client throughout the day, they could now simply buy Intel shares at one time at one price and then distribute the shares to the client accounts. This leveled out the playing field as the client with the lowest balance received the exact same price as the client with the highest balance. They were equal.
The other advantage was that under a fee arrangement there could be no more churning of accounts for higher commissions. Churning is trading more than needed thus creating more commissions for the broker and thus driving down the value of the account.
The fee-based model has become the predominant model in current times.
My Family Office
The basis of the family office works like this. The client pays the office an annual fee that has been agreed upon from inception. Family offices were the way to go for high-net-worth investors. They would in essence pay a fee (say $100,000 a year) to the broker to manage all of their accounts at an additional no charge. For this fee, the family office would employ a CPA, an attorney, banking services, insurance, a financial plan, and an investment manager. So, if the client had a net worth of $50 million dollars, having all those services for $100,000 or for 0.2% of the assets involved was a great deal. In addition, they also had everything under the same roof with various experts handling the entire estate. The only entrance fee was a vast amount of wealth. Small account holders need not apply.
What I have created is My Family Office. Just because you may not have the wealth to get the fantastic services of a family office doesn’t mean you don’t deserve to. Redfish Capital Management has created this for you.
What You Get
Redfish Capital (RC) will offer a written financial plan... that clients can track and log into and view progress anytime they want.
RC will offer an allocation of their retirement assets no matter where they are held...primarily being at their 401K. We also monitor and suggest semiannual rebalance
RC will give the client access to Orion which is an online source that allows them to view every account they have no matter where they are held as well as the returns generated.
RC will provide the outlines for a budget. I am of the firm belief that we cannot control what we make on our investments, but we can control what and how we spend. This usually ends up being the biggest contributor to building wealth in my opinion.
If the client needs to, RC can tell them how to open Roth IRA's, 529 plans, etc. (if you have assets that we manage for you we would charge .35% to cover our costs).
RC will have CPA Henry Nguyen CPA complete their taxes for them as well as make suggestions on filing.
RC will have attorney Terry Hogwood draft a will and Powers of Attorney for every client (you would be amazed at how many people do not have these in place)
RC will have our P & C agent Dawn Kleinschmidt annually preview their house insurance and auto policy and have her check the market to see if they can get a better rate and or coverage.
RC will annually review their life insurance policies.
Every client receives a minimum of one meeting per year and have unlimited email and calls.
The Secret is the PLAN
The most important aspect of all of the above is not how you invest your money, the way your will is set up, your insurance policies, or your income taxes. It is the overall financial plan. It is holistic. At Redfish Capital, we are convinced that your wealth success will be determined by proper planning and decision-making. The success of the plan will dictate your level of success at building wealth more than how you invest it.
Most advisors STILL work under the structure that stresses to sell a product to the client FIRST and then discuss their financial plan. I see this every day with banks and brokers. I personally worked for sales managers at the big firms who would implore us to use this method. "Just get the sale." It is wrong.
This is especially true with 403b salespeople and annuity salespeople. They are NOT planners. They may tell you they are but in the end, they only get paid if they sell you THEIR product. That is not how we work. We are planning first and you pay us an annual fee regardless of what you invest in. We will recommend the proper investments, but with no commission added to it.
What is a Fiduciary?
According to Investopedia...
A fiduciary is a person or organization that acts on behalf of another person or persons, putting their clients' interest ahead of their own, with a duty to preserve good faith and trust. Being a fiduciary thus requires being bound both legally and ethically to act in the other's best interests.
A fiduciary may be responsible for general well-being of another (e.g. a child's legal guardian), but often the task involves finances— managing the assets of another person, or of a group of people, for example. Money managers, financial advisors, bankers, insurance agents, accountants, executors, board members, and corporate officers all have fiduciary responsibility.
At Redfish Capital We act as Your interests, your plan, your wealth MUST come first. Your broker does NOT have fiduciary responsibility. We do.
How to Get Started
My Family Office pricing starts at $185 a month.
That’s it. You get all the above-mentioned items for just this one price a month.
Add up what you currently are paying for financial planners, commissions, CPA’s, legal fees, and insurance. What’s more, is that we do this all in house. One Team One Client One Price. No more chasing down your broker for a statement to send to the CPA, summaries of accounts to get to the lawyer, getting all the various statements in the mail or email, and then adding them up. One Team One Client One Price. Through Redfish Capital you finally get the service your money deserves.